Art prices reach record levels at auction

The sale prices of art investment pieces are reaching record levels at auction on both sides of the Atlantic.

Back in May 2015, Pablo Picasso’s Les Femmes d’Alger became the most expensive painting ever to sell at auction. The artwork exchanged hands at Christie’s auction house for the grand sum of $179.4 million. It was sold to an anonymous bidder.

At the time of the sale, Michael Ovtiz, former president of Walt Disney Co., uttered what is becoming a defining statement as he left the room: “We’re in fantasy land.”

Anonymous purchases in the art world aren’t rare, but the extravagant price paid for the piece has certainly got people talking and the common theory is that given the anonymous nature of the purchase and the high price paid, it is quite likely that Les Femmes d’Alger was bought as an investment piece.

Drop in the ocean

The Picasso is but one recent sale that has topped the scale in the hundreds of millions. During the four days of auctions in which the Picasso was sold, Christie’s total sales clocked in at $1.7 billion, its biggest week ever. Bloomberg reports http://www.bloomberg.com/news/articles/2015-06-21/auction-wars-christie-s-sotheby-s-and-the-art-of-competition that in just a two-hour period, the auction house sold $706 million worth of art.

Christie’s competitor Sotheby’s hasn’t been performing quite as well, but the New York house still managed to $890 million worth of art in two weeks in the busy May sales period. There’s certainly a lot of money moving through art at the moment, too much for it not to be driven at least partly by investors.

Over in London it’s a similar story. On 1 July, Sotheby’s held its contemporary art auction, the most valuable art auction event held in the English capital. The event raised over $204 million, the highest total for any auction of contemporary art held by the auction house in London.

Top of the bill, quite literally, was Andy Warhol’s One Dollar Bill (Silver Certificate). This was the artist’s landmark first painting in his ‘dollar’ series and was hand-painted by the iconic artist in 1962. It sold for $32.8 million.

Alex Branczik, head of contemporary art at Sotheby’s, commented on the event: “We reached new heights at Sotheby’s tonight with the highest total we’ve ever achieved for contemporary art in London. Bidders from across the globe were drawn to Warhol works that ripped up the rule book for 20th-century art; rediscovered Francis Bacon gems; and some of the greatest works by British artists of the last 70 years.

“Tonight’s achievements affirm the pivotal position of London within the international art market.”

On the up

Clearly prices are rising. As with many industries, high prices at the top end of the market filter down over time and investors – be they individuals or art fund managers – are no doubt planning for this. Mr Ovitz might think we are in “fantasy land”, but these price gains are consensus is that they are being driven by a higher level of investor activity within the art world.

The Global Fine Art Market report confirmed that 2014 saw a record level of activity with total auction turnover of $15.2 billion, a 26 per cent increase on 2013’s $12.05 billion. With Picassos and Warhols and Francis Bacons taking centre stage now, 2015 could well beat records once again as art investment continues its rise to fortune.

Philip Hoffman, the chief executive of the Fine Art Fund Group, which specialises in art investment, summed up in an interview with the Guardian exactly what he thinks is driving the interest: “It is the most desirable market. It’s the most liquid market. It’s sexy, it’s easy to understand, you can read up on it quite fast, there’s not too much history involved.”

Receive updates

Subscribe to our email newsletter.

Featured Posts

The Green Climate Fund (GCF) is currently looking into ways to channel investments into forestry projects as a way to help poorer nations with their climate commitments. 60 participants from developing and developed countries took part in a “ground-breaking” workshop in Bali last month. Together, they brainstormed how the GCF

Remit

To illustrate the current state of alternative assets around the globe including hedge funds, real estate, managed futures, commodities, forestry, venture capital, impact investment, private equity, structured financial products and derivatives contracts. We also analyse and provide news on the global performance of alternative investments.

Latest Alternative Investment Research News

1. Market volatility will highlight the advantages of alternative investments. Portfolio diversification strategies will be favoured as a way to mitigate effects of market disturbances

2. Technology continues to disrupt the alternative investment industry as with financial services sector as a whole. Fund managers will adopt and integrate technology platforms. This will be good for the alternative asset industry as fund managers will be more efficient and have more time to spend with investors. Technology will bring greater transparency.